A poll released by the World Economic Forum on Wednesday ahead of the Davos meeting next week warned that the cost of living crisis would be the biggest global risk over the next two years.
Global inflation remains at very high levels after energy and food prices rose last year after Russia, one of the largest oil and gas producers, invaded Ukraine.
Supply constraints caused by the Covid pandemic have also contributed to high consumer prices for decades.
“Conflict and geo-economic tensions have led to a series of closely interconnected global risks,” said the study, ahead of the annual meeting of the global elites of the World Economic Forum in the village of Davos, located in the Swiss Alps.
“These include crises in energy and food supplies, which are likely to continue over the next two years, and strong increases in the cost of living and debt service.”
He added that such crises “risk undermining efforts to address long-term risks, particularly those related to climate change, biodiversity, and investment in human capital.”
The survey, conducted with consultants Marsh McLennan and Zurich Insurance Group, took into account the views of more than 1,200 risk experts, policymakers and industry leaders globally.
The report called the cost-of-living crisis the “largest short-term risk” to 2025, followed by natural disasters, extreme weather events and “geoeconomic confrontation”.
“Energy, food, debt and disasters dominate the short-term risk landscape,” said Saadia Zahidi, Managing Director of the World Economic Forum (WEF).
“Those who are already the most vulnerable are suffering – and in the face of multiple crises, those deemed vulnerable are expanding rapidly, in countries rich and poor.”
The World Economic Forum study called for “leaders to act collectively and decisively, balancing short- and long-term perspectives.”
It concluded the need for cooperation in promoting “financial stability, technology management, economic development, and investment in research, science, education, and health.”
This year will be marked by “increased risks” related to food, energy, raw materials and cyber security that will disrupt global supply chains and influence investment decisions, said Carolina Clint, lead risk management at Marsh.
“At a time when countries and organizations must ramp up resilience efforts, economic headwinds will limit their ability to do so.”
Many analysts warn that the global economy will stagnate in 2023 as inflation continues to rise.